The UK Government announced a new UK Global Tariff (UKGT) for post-Brexit trade. The announcement details which goods are liable to customs duty on imports into the UK as from 1 January 2021. In addition to the rate of duty that will apply. These rates apply if the UK does not agree a preferential agreement with the country from which the goods are being imported. They therefore represent the potential worst case scenario for imports after 1 January 2021.
The UK is currently in a transition period following leaving the EU at the end of January 2020. Talks to reach a new trade agreement are on-going. As it stands, goods can still be shipped tariff free and without import and export formalities when trading cross-border with the EU.
However, as from 1 January 2021, this could all be set to change depending on how trade talks with the EU develop. At the same time, the UK seeks trade agreements with countries outside the EU, including the US. This is because it is not able to rely on the previous agreements in place between these countries and the EU.
Temporary Tariff and UKGT
In March 2019, the UK published a temporary tariff in preparation for no transition period on leaving the EU. As a result, this made 88% of goods tariff free. The new UK Global Tariff (UKGT) for post-Brexit trade reduces the level of tariff free goods to 60%.
Businesses currently importing goods into the UK or buy from EU suppliers should review what affect these likely tariffs could have on its business. This will mitigate risks of extra costs post-Brexit.
A review of supply chains and distribution networks will help in limiting exposure to VAT and duty implications that may arise. If you wish to discuss this further, please contact our VAT experts.
Brexit and VAT Webinar
Join our webinar to find out how you can future-proof your cross-border trade for the transition and beyond. Register your place here.